Why Marc Oestreich Is STILL Wrong About Private-Sector Unions

Maureen Martin passed away in February 2013. She was a long-time senior fellow for legal affairs at The Heartland Institute. Formerly a newspaper reporter, she became an attorney and has practiced law for nearly 30 years, generally concentrating in litigation and environmental law. She was an adjunct professor of environmental law at Loyola University Chicago for more than 10 years. Her op-eds were published in the Wall Street Journal, Investor’s Business Daily, the Washington Times, the Chicago Sun-Times, and the Chicago Tribune, among other outlets.Her favorite lawyer joke: “What’s the difference between a carp and a lawyer?” Answer: “One’s a scum-sucking bottom feeder; the other’s just a fish.”

As Bruno Behrend points out in his post below, Heartland is a “free-wheeling libertarian think tank,” and its thinkers are inevitably bound to disagree. And we do so with great respect for one another, because debate is not only welcome but necessary to clarify our thinking.

As I previously noted, I am not opposed to unions in the private sector. But here is why I believe Marc goes astray on his libertarian support for government employee unions.

First, public sector unions can buy off their bosses – the politicians with whom they negotiate their collective bargaining agreements – with campaign contributions. Thus, these politicians have every incentive to give the government employees anything they want, and no incentive to drive hard bargains. In the private sector, the bosses have no such incentive. Indeed, private sector bosses have the opposite incentive – to make the minimum necessary concessions.

Second, the political bosses have no skin in the game. It’s not their money at stake; it’s the taxpayers’ money. And government has no competition. So, again, these politicians have no incentive to drive hard bargains. It doesn’t matter what the price of government is – it can always raise taxes.

That can’t happen in the private sector. The companies must factor in any number of economic factors. Who are the competitors? How much price competition is there? How will union agreements affect the cost of goods sold and thus the market price of competitors’ products? And how will the cost of workers’ wages and benefits affect the company’s profitability?

On the other hand, how skilled is the company’s labor pool? And how do the company’s wages and benefits compare with competitors? If the company is too stingy on wages and benefits, will employees quit and how badly will the company be hurt if this happens?

Third, when public employee unions make campaign contributions, they make them with union dues deducted from government employees’ wages, as Marc points out. But ultimately, this is taxpayers’ money, not private money. Because of their out-sized bargaining power, government employees can pad their wages, during negotiations, to include the amount going to union dues. In the private sector, campaign contributions have to come from profits, not from core operating expenses.

Last, the bedrock component of collective bargaining is the right to strike. If private workers for, say Ford Motor Company, go on strike, I can buy a Chevrolet or a Jeep. But if government employees go on strike, a citizen can’t get a drivers’ license or food stamps or welfare payments or state supplements to pay heating bills during frigid Wisconsin winters. And if a parent has kids in the public schools, they don’t get educated if their teachers are on strike. True, not all government services are critical, even life-saving. But some government services indeed are.

Public employees in theory have no right to strike. Public worker strikes have happened, as PATCO knows. And how well are strike ban laws working for us in Wisconsin, where thousands of teachers effectively went on strike by calling in sick and shutting down schools?